J k Bernstein

Jake B t i
Trading Webinar Series
http://www.trade-futures.com
800-678-5253 847-831-6900

Day Trade with Gaps

Th
Thursday
d 14 June
J 2007

© 2007 by Jake Bernstein

www.trade-futures.com
800 678 5253 * 847-831-6900
800-678-5253 847 831 6900
What is a Gap and why is a gap?
z A gap trade is an opening price above the last bar
high or below the last bar low
z A gap is caused by news
z B lli h news causes gap up openings
Bullish i
z Bearish news causes gap down openings
z A gap can be the start of something big or…
z or a gap can be the start of something small but
very accurate
z Some of the largest
g one day y moves in history
y have
been gap days
z Gaps are caused by emotional responses to news
z Emotional responses are often wrong
z Professionals take advantage of emotional
reactions to news

© 2007 by Jake Bernstein

www.trade-futures.com 800-678-5253 * 847-831-6900
z A few more details about gaps
z Gaps
p not necessarily y related to underlying
y g
trends
z Some of the most profitable gap down openings
have developed in underlying bull markets
z Some of the most profitable gap up openings
have developed in underlying bear markets
z Gap days tend to produce large trading ranges
z Gap days tend to be pivotal – by this I mean that
many important tops and bottoms occur on gap
days in stocks and futures
z Gap days can also be high trading volume days
z Will 24 hr trading eliminate gaps?
Looking at a Gap
A Few Gaps up and Down
A Few more Gap Trades
Gap lower open is a BUY SETUP
which is triggered when LOW of
previous day is penetrated
Gap buy trade triggered and
closed out at end of day
Gap buy trade close out on
fi t profitable
first fit bl opening
i (FPO)
Exit strategies long gap trade
z Exit at stop loss
z Exit at profit target
g
z Exit on first profitable opening
z Combined strategy on multiple contacts
z Exit one at profit target 1 and raise stop to
break even
z Exit one at end of day
z Exit one on FPO
Initial stop loss and buy trigger
z Consider the variables…
1) Size of gap in cents or ticks – the bigger the
gap the better the trade
2) Amount of penetration into previous daily
low (in cents or ticks)
3) Size of stop loss

4) Initial profit target

SEE ILLUSTRATION
GAP OPENING SIZE
Si off Trigger
Size Ti
Actual Gap Buys
A gap buy and exit
Gap
p down not filled – no trade
Buy Gaps and Profit Target
Does “24” hour trading matter
when
h it comes tot gaps? ?
Gaps at major turns
Gaps up and down
Sell gap and tigger
 Coming Jake Bernstein Appearances…
z June 18-21 Sao Paulo – Trading Seminar
z July 16-20 Thai-Live Seminar Thailand
z September 1111-15
15 Stockholm Traders Conference
z September 18 Perth Australia
z September 20 Adelaide Australia
z September 23 Melbourne Australia
z September 26 Brisbane Australia
z September 27 Sydney Australia
z Sydney Round Table Real Time 29 Sep – 1 Oct
z London Economic Forum 4-6 October
z Los Angeles Jake Bernstein 5 Day Real Time Seminar 13 13-17
17 October
(early registration discount available now – Save 30%)
Concluding
z Gap trades can be very profitable tools
z You must always use a stop loss
z Change stop to break even as soon as possible
z T k first
Take fi t profit
fit and/or
d/ change
h stop
t after
ft trade
t d has
h made d
a profit of 50% of previous daily trading range
z TRADE MULTIPLE POSITIONS for best results
z U i off 3 or 4 iis b
Units best (i
(i.e. 3 contracts or 300 shares)
h )

z I can be reached at 800-678-5253 or 847-831-6900

z Email me if you have questions: jake@trade-futures.com
z Best of trading
z Jake Bernstein

© 2007 by Jake Bernstein

www.trade-futures.com 800-678-5253 * 847-831-6900